Antony Manduca and Joanna Ripard

Micro-credit scheme to be operational by September

The micro-credit scheme, a €10 million fund financed by the European Union under the JEREMIE regional funding scheme, grants SMEs and self-employed loans of up to €25,000 at advantageous interest rates.

The micro-credit scheme announced in November's Budget aimed at helping SMEs is not expected to be operational before September, The Times Business has learnt, even though it was envisaged to be launched in April.

Through this scheme a €10 million fund, financed by the European Union under the JEREMIE regional funding scheme, will be set up to grant SMEs and self-employed loans of up to €25,000 at advantageous interest rates.

The delay in the implementation of the scheme, which has been criticised by both the Chamber for Small and Medium Enterprises - GRTU and the Chamber of Commerce, Industry and Enterprise, has been linked to bureaucratic procedures by the European Investment Bank in selecting a local financial institution to administer the scheme.

GRTU director general Vince Farrugia said he has been urging the government to implement this scheme since the day it was announced in the Budget, by first utilising existing funds and then switching to EU funds when these become available.

However, this was dismissed by Malta Enterprise chairman Alan Camilleri, who told The Times Business the initiative was an EU-funded one.

The government has in fact finalised all procedures relating to the micro-credit schemes' financing this week and the authorities are now waiting for the European Investment Bank to complete its own, Parliamentary Secretary for Small Business Jason Azzopardi told The Times Business yesterday.

"It is a misconception that the micro-credit schemes have stalled or that authorities are dragging their feet," Dr Azzopardi said. "The government is fully aware that it is in small businesses' interest for the schemes to come into effect as soon as possible. But this does not depend solely on the government, but also on the European Investment Bank. Whatever the government and the Finance Ministry were required to do has been done and will continue to be done."

Dr Azzopardi, who had small business added to his portfolio two months ago, said he has been involved in various meetings with the government and Malta Enterprise, the economic development agency, to leave "no stone unturned in this process". The government signed the agreement on micro-credit schemes with the European Investment Bank a few weeks ago.

"People do not appreciate that there is necessary bureaucracy at the European Investment Bank so that it issues a call to financial institutions to express interest in administering the schemes. This is being processed as we speak. On a daily basis, the Finance Ministry, my secretariat, and the Permanent Secretary have been hounding the EIB but we are more than sure that it is doing its part. I do empathise with small businesses but it is not a question of the government not doing enough or being fast enough, it is nothing of the sort."

Reacting to the government's assurance over the scheme GRTU director-general Vince Farrugia said that while the September date for the scheme was unacceptable, "the information we have is that the Ministry of Finance has now set up the €10 million fund to get the micro scheme going. So at least we know the money is available."

He added: "The ball is now in Malta Enterprise's court to produce the necessary scheme document. Where micro and small firms are concerned government bureaucrats are never in a hurry except to issue penalties and say no.

"Now that the board and money fund is established I expect results much earlier. I said September is absolutely not acceptable and that I expect the scheme to be in action not later than June."

In addition to the €10 million fund, the European Investment Bank could top up an additional €10 million for the microfinance scheme.

Meanwhile, the Malta Chamber of Commerce, Industry and Enterprise has urged the government to launch the micro credit scheme "without further delay". It said the fund, aimed at providing SMEs with the necessary liquidity for investment, is particularly important due to the economic downturn.

"In the last Budget speech, the Minister for Finance, the Economy and Investment stated that the government would be setting up a fund of €10 million as part of a micro credit scheme targeted at small and medium enterprises, as well as the self-employed. It was also stated that the scheme would be introduced during 2010. At the time, the Malta Chamber of Commerce, Industry and Enterprise had commended this initiative, and augured its swift implementation.

"Furthermore, as mentioned in the Budget speech, should the demand justify this investment the European Investment Bank would consider topping up this fund with a further €10 million. Up until now, there is no direct EIB funding for SMEs, with Maltese banks currently providing the funding for small companies. The Malta Chamber stresses that such an opportunity of additional funding is not one to be missed," the Chamber said in a statement.

The Chamber said it has been advised by the authorities that discussions with the EIB on the draft criteria for the selection of the financial intermediaries are currently under way. It encouraged the government to speed up the launch and implementation "of this much needed scheme".

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